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Nothing can hold Greece back, prime minister says

By Ed Payne, CNN
Greek Prime Minister George Papandreou -- seen here on November 7 -- said that his country has "reversed a downward spiral."
Greek Prime Minister George Papandreou -- seen here on November 7 -- said that his country has "reversed a downward spiral."
STORY HIGHLIGHTS
  • Europe and IMF bailed out Greece with a 110-billion-euro, three-year loan
  • Analysts feared that Greece's debt crisis could topple other heavily indebted nations
  • Greece is making tremendous efforts to correct the past, Papandreou says
  • Austerity measures implemented by the government have been met by widespread protests
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Athens, Greece (CNN) -- Greece is back from the brink of financial disaster and has paved the way for the future, Prime Minister George Papandreou proclaimed Thursday.

"I would like to tell you a story, a story of a country, my country Greece, which only a few months ago was universally considered to be a country in free fall. A country that was doomed to fail," Papandreou told journalists in the Greek capital.

"But in just a matter of months... Greece has succeeded in overturning expectations and reversing a downward spiral."

Greece was saved from default in May when the EU and the International Monetary Fund agreed to a 110-billion-euro, three-year loan bailout.

According to European Central Bank estimates, Greece's economy is expected to shrink by 4 percent in 2010 and some 2-and-a-half percent in 2011.

Earlier in May, analysts feared that Greece's sovereign debt crisis and increased public borrowing could trigger a financial contagion in other countries with large deficits such as Portugal, Ireland, Italy and Spain.

An initial round of cutbacks was introduced in the spring in a bid to decrease Greece's budget deficit from around 14 percent of its gross domestic product to under the EU limit of 3 percent by 2014.

The austerity measures implemented by the Papandreou government have been met by widespread protests as the nation backs away from the brink of bankruptcy.

The Greek prime minister said he has changed the things holding his country back by cleaning fiscal house, restoring confidence in its institutions and addressing Greece's credibility gap. Previous governments had underestimated the nation's debt.

The changes implemented by Papandreou have cut government spending, including wage and pension reforms, and changes to the tax code, giving the Greek government an opportunity to rebuild.

He said Greece will have cut its deficit by at least 5.5 percent of gross domestic product by the end of the year.

"It does gives us time to make the necessary changes," Papandreou said, noting the country is "changing and changing rapidly."

"I believe that nothing can hold us back now."